Exports from Papua New Guinea rose 64 per cent in value during 2014 to K21,903.6 million, largely due to the start of LNG production, according to the Bank of Papua New Guinea.
In its March Quarterly Update, which aggregates the four quarters of the 2014 fiscal year, the bank reports the total value of exports rose from K13,337.3 million in 2013, to K21,903.6 million.
An analysis of the figures reveals most of the increase has come from the PNG LNG plant. The value of LNG exports (LNG and condensate) totalled K7,727.7 million in its first three quarters of production.
Gold, copper, cobalt and oil exports remained stable over the year, although Ramu nickel mine exports rose in value from K426.9 million to K739.4 million, a rise of about 40%.
The value of agricultural exports rose from K2,744 million in 2013 to K3,051.9 million last year. However, the December quarter saw agricultural exports halve from K1,052.3 million to K493.2 million.
Forestry exports rose approximately 11% in value from K729.7 to K815.1 over the year.
Log exports in 2014 reached their highest levels since at least 1990, and well above sustainable harvest levels, despite government policies on sustainable development and restricting round log exports, and of halting the land/resource grabbing under SABLs, the Executive Director of the Institute of National Affairs, Paul Barker, told Business Advantage PNG.
‘Exports totalled 3.8 million cubic metres, having grown steadily from 2.3 million cubic metres in 2005. Eighty-eight percent of logging exports went to China, but it should be remembered that China re-exports a fair portion of its imports, after processing it into planks, through to finished products.’
Marine products sales also rose over the year from K234.4 million to K321.4 million.
In terms of international prices, ‘most other mineral and agricultural commodity prices have remained depressed or at least well below recent peaks,’ says Barker.
‘The exceptions have been cocoa prices, which has had subdued production thanks to the Cocoa Pod Borer (disease), despite localised recovery, and tea, which has staged some recovery in price after suffering years of low prices.’
Balance of payments
‘The 64% rise in exports accounts for around half the extraordinary improvement in the current account balance of over K14 billion,’ points out Senior Economist, Paul Flanagan.
He told Business Advantage PNG: ‘The other major contributor to the improvement was the fall in imports from K12.162bn to K9.024bn – a fall of 25.8%.
‘The cause for this low level of imports is unclear, but foreign exchange restrictions may have contributed.’
But the gains on the current account have been almost entirely offset on the capital account, which is in deficit by K8 billon, due to the start of repaying loans on the PNG LNG project and other factors, he says.
‘The overall balance of payments shows that despite this extraordinary increase in exports driven by PNG LNG exports and Ramu, there was still a reduction in PNG’s level of foreign reserves by K872m due to on-going balance of payments deficits.’